In a surprise to economic watchers, data released this morning by the U.S. Census Bureau and the Department of Housing and Urban Development revealed that single‑family housing starts climbed by 2.8% in July, reaching an annual rate of 939,000 units — a rebound from the revised June rate of 913,000.
Meanwhile, total housing starts — including multifamily units — jumped 5.2% month-over-month to 1.428 million units, marking a 12.9% increase from July 2024. In contrast, building permits for single‑family homes were relatively stable, ticking up 0.5% to 870,000 units, while total permits dipped 2.8% to 1.354 million.
The indicators overall gain some ground despite a market facing elevated mortgage rates, affordability challenges, and dampened builder optimism.
Economists and market watchers offered measured interpretations of the data. For instance, analysts noted that investor expectations of a forthcoming Federal Reserve rate cut, supported by signs of labor-market softening, have helped pull down the average 30‑year mortgage rate to 6.58% — its lowest level since October — though that’s still historically high by pre‑pandemic standards.
Meanwhile, the National Association of Home Builders had a more dour take on the news, noting that “builders continue to contend with challenging housing affordability conditions and a host of supply-side headwinds.”
“Single-family production continues to operate at reduced levels due to ongoing housing affordability challenges including persistently high mortgage rates, the skilled labor shortage, and excessive regulatory costs,” stated NAHB Chairman Buddy Hughes.
The organization also looked at home-building activity regionally. On a regional and year-to-date basis, combined single-family and multifamily starts were 10.2% higher in the Northeast, 17.7% higher in the Midwest, 2.4% lower in the South and 0.5% lower in the West.
Overall permits decreased 2.8% to a 1.35-million-unit annualized rate in July; single-family permits increased 0.5% to an 870,000-unit rate and are down 5.8% on a year-to-date basis. For regional permit data on a year-to-date basis, permits were 16.6% lower in the Northeast, 9.1% higher in the Midwest, 3.4% lower in the South and 5.1% lower in the West.
“Despite a modest uptick after four-month streak of declines, single-family permits — a leading indicator of future construction — remain near their lowest level since March 2023, signaling continued weakness in the sector,” noted Odeta Kushi, deputy chief economist at First American Financial Corporation.
“The monthly increase in housing starts and permits is a welcome development, but one data point doesn’t make a trend," she added. "Sustained gains are needed to demonstrate continued progress in single-family homebuilding. The housing market remains structurally undersupplied, and we need more hammers at work to build the homes that are still in short supply.”
Takeaways
Despite headwinds, the July housing data offers at least a modest bright spot: an unexpected uptick in single-family starts. Still, the limited strength in permits suggests it may be more of a short-term rebound than the start of a sustained recovery.
With affordability strain still sharply limiting demand — even as builder incentives rise — markets will be watching for confirmation of a trend, not just a blip.
